Arnold Van Den Berg's singular focus on value investing let him beat the market over a 29-year period-to the delight of his clients.
Ask Harold Berlfein what he likes about his investment advisor, and his advisor's integrity and disciplined value investment style are among the first things he'll talk about. So is the advisor's thoroughness and trustworthiness.
But it really comes down to this: After 27 years as a client of Arnold Van Den Berg, president of Century Management Inc. in Austin, Texas, Berlfein has fulfilled his dream of enjoying a worry-free retirement.
"When you're with a guy for all those years, you don't second-guess him," says Berlfein, a retired accountant living in Los Angeles. "I have friends who look at the stock market every day. I look at it when Arnie sends me a report."
Integrity has a lot to do with this, Berlfein says, but so does performance. Since Van Den Berg founded the company in 1974, the firm has brought its clients average annual returns of 15.70% net of fees-more than 200 basis points better than the average return of the S&P 500. Of late, the firm has also sheltered its clients from the volatile winds of Wall Street, with net returns of 43.62% in 2000 and 10.00% in 2001. Last year's loss of 0.43% was Century Management's first down year since 1990.
The firm is also ranked fourth in Nelson's Top 40 Value Money Managers list and 23rd among managers of all styles, with five-year returns that exceed those of such respected managers as Royce & Associates and David L. Babson & Co. as of year-end 2002.
It's the type of record that is certainly eye-catching, especially when you consider Century Management is a small, family-run advisory firm that shuns mutual funds and relies exclusively on the stock-picking prowess of Van Den Berg and an in-house team of analysts headed by his son-in-law, Jim Brilliant. Son Scott Van Den Berg, meanwhile, takes care of the financial planning side of the business.
Van Den Berg says there's nothing terribly fancy about how the firm's investment management side operates. The philosophy, he says, is value investing in the strictest possible sense. Century Management thrives on the mundane, the obscure and the ignored companies out there that have one thing in common: cheap share prices. One of the golden rules at the firm is that any company it buys must be selling at a 50% discount.
Not that the firm ignores the more recognizable names. Century Management has indeed made profits off companies like Union Carbide, Sears Roebuck and Ethan Allen. But according to Van Den Berg, what really churns the butter at Century Management are little no-name companies like Moore Products, Apogee Glass and Lufkin oil drilling. A good two-thirds of the firm's portfolio is made up of small- and mid-cap companies, many of which have been pulled out of Wall Street's heap of discards.
"We're basically acting as junk dealers," says Van Den Berg. "It's not a reflection on our genius. We are doing what Graham and Buffet taught, but probably better than most people."